While remodeling activity is expected to slow down during the potential economic downturn ahead, experts predict that the long-term outlook for home renovations is bright.
Todd Tomalak, principal of building products at Zonda, shared this optimism during a recent webinar. The present market conditions suggest that the decade of 2020-2030 may be considered the “golden era of remodeling,” according to Tomalak. “We’re in a period that we just very well might look back at and identify as a special time for remodeling,” said Tomalak. “There may be a recession stuck in the middle with a cyclical slowdown, but we expect growth to resume when prices stabilize.”
Tomalak predicts low-cost maintenance and repair jobs and high-cost rehab jobs may experience a slowdown over the next 18 months. He predicts that mid-priced projects — in the $7,000 to $35,000 range — will continue to experience a high volume of activity.
Tomalak points to several factors that favor a strong runway for mid-priced remodeling activity ahead. First, the aging housing stock and, in particular, the number of homes between 20 and 50 years old — which he says is a prime time for discretionary projects — will lead to more mid-priced projects.
In addition, he believes the number of homebuyers that settled for features in their home due to the short supply of homes for sale and competitive market, means there are many homeowners who wish to alter their spaces. “You don’t have to move the structure of the home, but there is a possibility for a refresh. We think this is going to play out in a really important way as we begin to see the market settle in the next 12-18 months,” said Tomalak. “You basically have this cohort of households that are in a home, but the quality or the match compared to prior decades is likely poorer because they had to buy whatever was available.”
While aging homes, typically homes over 50 years old, tend to drive remodeling spending on total rehab projects and structural changes, the trend is “very different for other product categories,” according to Tomalak. He notes outdoor projects, including patio installations, outdoor kitchen projects and decking projects, are most common in homes built between three to five years ago.
Exterior projects, flooring projects, kitchens, baths, and systems and efficiency projects tend to be most common in homes between 20 to 50 years old. “In a normal environment where there is adequate supply, you see a pretty tight correlation between sales and turnover, but now that we’ve got a housing shortage, it’s disconnected. It’s a prime time for discretionary projects,” Tomalak said. “What we have is a tailwind factor that we didn’t have before, the raw count of homes that are in the 20- to 50-year-old window that will have to be updated.”